Is Apple Worth More than Exxon? Is Luft Geshäft More Valuable Than Petroleum?

Is Apple Worth More than Exxon? Is Luft Geshäft More Valuable Than Petroleum?

By Shlomo Maital

Steve Jobs announcing the Mac in 1984

Financial Times reports that last Tuesday, in intraday trading, the market value of Apple shares briefly exceeded that of Exxon. At the close of trading, though, Apple again trailed, but not by much – its shares were worth $347 b., compared to $351 b. for Exxon. Apple and Exxon now far exceed the market value of Wal-Mart, GE and other giants.

This leads us to ask: Is Luft Geshäft (German for “air business”, i.e. gadgets that fetch very high prices and earn high margins) worth more than sticky black oil that powers our cars, cools and lights our homes and makes our plastic?

The answer is, yes. Last quarter, Apple’s net profit doubled, reaching $ 7.31 billion, on revenue of $ 28.6 billion. iPhone and iPad did not exist five years ago, but now account for about two-thirds of revenue. Apple’s cash reached $ 76.2 billion – again, at one point, more than the cash on-hand of the U.S. Treasury (before the debt ceiling was raised). Apple’s growth was particularly driven by demand growth in China, and iPhone shipments reached 20.3 million. Moreover, in the coming year, Apple computer sales are expected to double, and iPhone sales are expected to triple. If Apple’s new iCloud music and information storage services are successful, it will bring Apple millions of new users.

So, for a brief but glorious moment in time, it was indeed possible to say that Luft Geshäft did exceed Big Oil in value, and more important, consistent, persistent, blue-ocean innovative energy was more valuable than conventional energy. Stuff that came out of the minds of creative people was more valuable than stuff that was pulled out of the ground.

On the other hand, how many other such examples are there? Very few. It may indeed be tougher to extract ideas from deep in the minds of creative people, than it is to pull gas and oil from a sea bottom three miles deep and five miles under the seabed.